Having imprisoned two of Catalonia’s main separatist leaders, Spanish PM Rajoy announced plans to remove leadership and replace it with direct rule by the central government in Madrid. Defiant Catalan leader Charles Puigdemont told Catalans, Spaniards and the rest of Europe on TV that Spanish imposition of Article 155 is a “humiliation” and “the worst attack against the institutions and people of Catalonia since the military dictatorship of Francisco Franco.” Catalan officials are vowing to ignore orders from Madrid, and instead “only listen to the will of the Catalan people.”
Bank runs on CaixaBank and Banco Sabadell branches in the region appeared likely to intensify Monday, and inflict some real pain in Madrid. Separatists are mobilizing a human shield—a “peaceful and democratic defense of the institutions.” Rajoy should have allowed a fair and free election, but his hard-line tactics backfired and convinced many Catalonians faithful to Spain that perhaps secession WAS necessary after all. And if Catalonia wants to leave, they should be allowed to do so: there is no justification for keeping Catalonia bound to Spain forever. Nor for that matter should the U.S. have the right to keep California in the nation if its residents want to leave.
Elsewhere in European humanity’s fight to break free of government bureaucracy and control, Lombardy and Veneto, two of Italy’s most prosperous regions (containing Milan and Venice) voted overwhelmingly Sunday for more autonomy from Italy… Czech Republic elected media-wise billionaire Andrej Babis, a Trump-like figure who is anti-immigrant and Euro-skeptic, to lead the country. Not good news for European Union power-brokers… And Theresa May reportedly “begged” the EU for BREXIT conditions that will allow her to remain in power.
Tax reduction progress. Both the Senate and House passed 2018 budgets and began moving toward a resolution intended to lead to a massive tax code overhaul. Rand Paul voted with all Democrats against the GOP bill, which would result in $1.5 trillion in tax cuts, but it passed anyway, 51-49. Paul Twittered that he was “all in” for the “biggest, boldest cuts possible – and soon” but added that he also wanted to see spending reforms, including for Medicare and Medicaid entitlements.
Clinton-gate. The Senate Judiciary Committee finally decided to look into a shady Russian deal, approved by the Obama administration, that handed Putin 20% of America’s uranium reserves and netted the Clintons millions of dollars in Clinton foundation donations and “speaking fees.” The Committee also intends to get testimony from an informant known as “Confidential Source 1,” who was allegedly muzzled by the FBI and Obama administration when he attempted to come forward with relevant information.
Another healthcare non-starter. Sens. Alexander and Murray’s plan to fund the Obamacare cost-sharing reduction program in exchange for waivers allowing states more implementation latitude drew criticism from the President, conservatives and even Speaker Paul Ryan. The principal reason seemed to be opposition to resuming payments to insurance carriers.
Getting desperate? In another sign that the good guys are winning, globalists sent Obama and George Jr. to the stage last week to disparage current policy, pointing in some instances at conditions that resulted from their own policies. Dubya blasted “bigotry,” while urging the country to accept “globalization.” Both ex-presidents appeared to be doing what they were instructed to do, with Trump clearly the target.
MARKETS – for the week ending October 20
Real money continued sliding: gold was down $25 to $1280/ounce and silver 33-cents to $17.08/oz.
US stocks closed higher: the Dow was up 2.0% at 23329 and the S&P rose 0.9% to 2575. Schwab reported that the net cash level among its clients has only been lower once since the depths of the financial crisis in Q1 2009. And junk bond managers are now apparently piling into stocks. We agree that the market is about to crack, but we disagree with analysts who are predicting a correction of over 15%.
Mining stocks (the XAU Index) tumbled 2.6% to 85.01.
Crude oil (the WTIC Index) oozed 39-cents higher to $51.84/barrel.
Commodities (GCC Index) dropped 0.5% to 18.94.
Currencies. The Federal Reserve Note (= dollar, via USD Index) rose 0.7% to 93.58.
Cryptocurrencies. Bitcoin continued climbing, posting a $1200 weekly gain to $5517, then briefly topped $6000 over the weekend on soaring demand from Zimbabwe … to a larger market capitalization ($100B) than Goldman-Sachs.
US Treasury bonds fell: 10-year and 30-year yields climbed 11 and 8 basis points, respectively, to 2.39% and 2.89%.
About the Author
Wayne Peterson is Manager of Wayne Framework 2, LLC, author of “But What If I’m Right?” and publisher of the Transformation Watch newsletter and weekly Crypto Analyst Newsletter. For free weekly receipt of these financial blogs, subscribe here.